Sterling rose 0.6% after reports that British Prime Minister Boris Johnson will step down after a string of ministerial resignations following a two-year low on Wednesday amid political uncertainty. FTSE
the index in London added 0.9%.
Raw oil fluctuated back and forth from $100 a barrel as supply shortages and concerns about demand attracted market attention.
The STOXX index, which includes 600 European companies, rose 1.2% to 412 points, still about 16% below its all-time high six months ago.
The MSCI Global Equity Index rose 0.4%, losing about a fifth of its value this year.
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Kevin Tozet, a member of Carmignac’s wealth management investment committee, said US economic data indicated a slowdown in economic growth, but not an imminent recession.
“Markets are potentially overstating the risk of a recession, or a recession is approaching very quickly,” Tozet said, adding that investors are leaning towards utility-type companies such as pharmaceuticals, which are less sensitive to downturns.
“We collectively buy what we need more than what we want,” Tozet said.
Elsewhere in Europe, the euro has struggled to break from near-two-century lows against the US dollar.
“The euro is in free fall and we haven’t heard any comments from the European Central Bank. It’s like they’re locked in a bunker,” Tozet said.
“It’s not just a matter of recession, it’s a matter of how bleak Europe is getting,” added Chris Weston, head of research at Melbourne-based brokerage Pepperstone.
Unlike the Bank of England and the Federal Reserve, the ECB has yet to start raising interest rates despite record high inflation in the euro area, but the central bank is expected to raise rates by 25 basis points later this month.
“They can walk at 50 base points, and potentially they should,” Tozet said.
Fed speaker duet
S&P 500 futures rose 0.4%, signaling a strong start to Wall Street late in the session.
The benchmark yield on 10-year US bonds was last at 2.942%, slightly higher that day after falling from a more than 11-year high of 3.498% on June 14.
The yield curve, measured by the gap between 2-year and 10-year US bond yields, continued to move further into inverted territory, a sign that bond markets suspect aggressive rate hikes to curb inflation.
“The coincidence of some pretty hot labor market data and much more resilient ISM services … once again reinforces the notion that the Fed is unlikely to ease the pace and intensity of tightening,” said Mizuho economist Vishnu Varatan.
“The next litmus test for determining the direction of returns … will be the speeches by Bullard and Waller, which should shed more light on the hawkish camp thinking inside (the Fed),” said NatWest Markets rates strategist Jan Nevruzi.
“Are they basing themselves on fears of a recession, or are they continuing to insist that the Fed should rise above the neutral level as quickly as possible and contain inflation, regardless of the cost of growth?”
James Bullard, St. Louis Fed President, and Fed Governor Christopher Waller are scheduled to speak at 1700 GMT, although Friday’s US employment data is also eagerly awaited.
Asian equities managed a gradual gain, with Asia Pacific’s broadest MSCI stock index outside of Japan up 1% from a two-month low.
Japan’s Nikkei closed up 1.47%, while South Korea’s KOSPI gained 1.8%, its best day in nearly two weeks, with Samsung Electronics one of the biggest players after posting a earnings forecast suggesting rebuilding its chip manufacturing business.
The Australian and New Zealand dollars rose from two-year lows, adding 0.51% and 0.54% respectively.
Brent oil futures dipped below $100 a barrel early in the Asian session but rebounded and were last at $101.23, up 0.5% on the day, but are now down almost 10% for the day. week.
Copper prices in Shanghai have stabilized but are down 20% in a month as investors worry about demand for the industrial metal.